Shares of United Community Banks, Inc. (UCBI) hit a new 52-week high, touching $16.88 in the second half of the trading session on Nov 20. However, the stock closed the session at $16.78, which reflects a year-to-date return of 68.5%. The trading volume for the session was 467,640 shares.
Despite the strong price appreciation, this Zacks Rank #2 (Buy) Southeast bank has considerable upside left, given its positive estimate revision over the last 30 days and expected year-over-year earnings growth of 8.0% for 2013.
Growth Drivers
United Community Banks’ impressive price performance reflects strong third-quarter 2013 results comprising a positive earnings surprise of 10.5%. Additionally, the company maintains a sound capital position in compliance with regulatory requirements.
On Oct 24, United Community Banks declared third-quarter earnings of 21 cents per share, beating the Zacks Consensus Estimate of 19 cents. Better-than-expected results were driven by lower operating expenses, partially offset by a decrease in the top line.
Operating expenses were $40.1 million, down 10.5% from the prior-year quarter figure of $44.8 million. United Community Banks witnessed a year-over-year surge in loan and deposits as well. While average loans rose 2.5% to $4.3 billion, deposits were up 3.4% to $6.0 billion.
Further, United Community Banks’ credit quality reflected significant improvement. Total nonperforming assets declined 78.5% year over year to $30.6 million. Net charge-offs were $4.5 million, as against $20.6 million in the prior-year quarter.
Estimate Revisions Show Potency
In the last 30 days, 2 of the 4 estimates have been revised upward for 2013, pushing the Zacks Consensus Estimate upward. Further, for 2014, 3 out of the 4 estimates have been revised upward.
Some better-ranked banks in the same region include American National Bankshares Inc. (AMNB), First Community Corp. (FCCO) and First NBC Bank Holding Co. (NBCB). All these stocks carry a Zacks Rank #1 (Strong Buy).
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